Can you fix your FICO score in 30 minutes?

Is it really all important to have a high FICO score? If you end up with a FICO score that falls into the toilet, how can you recover it and have good credit again? Ever? In your lifetime?

Before I answer this, let me ask you a question about how important it is to save your FICO score in these situations.

• What if you owe a zillion dollars and are paying 1/3 of your income to the bank in interest costs?
• What if you are completely upside down and you owe $100,000 more than your house is worth?
• What if you can't afford to maintain your health insurance?
• What if you're unemployed?
• What if you're advising your client on a short sale?

What should you tell them about what can and should be done to save a FICO score?

Happily, the answer is simple.

Don't be a slave to your FICO score. Don't let your clients worry about it either.

For many situations such as credit card debt settlement, you need to "go dark" and stop paying each month. Why should the bank reduce what you owe if you are paying them on time?

For short sales, you can make EVERY payment on time and STILL get out from under. There is usually no reason to ever make a late mortgage payment.

If you are on the ropes and can't afford the payments, you might end up living rent free while you don't pay ANY mortgage payment. Then you hopefully save enough money to get some really nice new place.

You can even buy "subject to" an existing loan and become a homeowner again, even if you've just come from living rent free at the expense of your old mortgage company.

With a loan mod, many of the "trial periods" require you to make reduced payments for awhile. And to get the lender's attention, NO payments is like hitting the mule with a two-by-four, and without that you won't get their (or your lender's) attention.

So many debt relief and "loss mitigation" situations require you to trash your FICO score.

Can you get it back?

There are two strategies for doing so.

The first is to settle with your creditors (or clients' creditors) with FIXING credit as a condition of settlement. There are sneaky ways of doing this, very sneaky. But legal and ethical.

The second is to do a "credit repair" thing after you're done with the debts. This works also and only costs maybe a grand. Well worth it. And it only takes 30 minutes or so to learn all you need to know about fixing anyone's FICO score. Once you know how this works, you are no longer a slave to your FICO score and you can begin to do the right thing for your family without stupidly worrying about some illusion like a "FICO score."

This video spells out some neat tricks. Enjoy and please leave a comment!

 

Don't buy this $28,000 home 10 minutes from Washington DC

Washington DC and Northern Virginia real estate is amonst the most expensive in the US and has declined quite modestly. A half million or even $750,000 doesn't buy a whole lot.

And yet, here are homes going for $30,000 or thereabouts, and I wouldn't touch them with a ten foot pole and neither should you.

Let me explain.

One of my direct mail pieces that I sent got this interesting response.

Guy owes $100,000 on a first and maybe $35,000 on a second.

He has a one bedroom CONDO (uh oh) and he wants OUT.

It is very sad to hear these stories from real people with really bad problems but there is no hope for this one. Here's why, and here's how YOU can benefit.

Condos have severe problems so be VERY careful. This one has $400 per month in condo association fees. Think about that. $400 per MONTH. Throw in property taxes of say $100 per month and you've got $500 per month before paying for maintenance and all the things INSIDE the unit that need to be done for ANY home, condo or single family.

Now the rents here may be $1000 per month for a one bedroom, or $1500 even. So an investor will have potentially a GREAT cash flow. But really?

What about maintenance problems. The association may have fallen apart. There may be 50% or more of the dwellings in the association that are NOT paying fees. And there may be terrible plumbing, sewage, roof problems…who is going to fix those if the homeowners are all in foreclosure?

With a foreclosure HOUSE you can fix your own problems. But with a condo that has a non functional association, you can't do much about it.

That's why condos are spiraling downwards and I am very cautious today.

In fact, I'm not the only one. The condo complex is loaded with one and two bedroom condos that haven't sold for $45,000 or even $35,000. And the people who bought short sales a year or so ago in that complex have really lost equity and no doubt regret their decision to live in a falling-apart ghost complex.

Bottom line is there is a HUGE amount of opportunity in real estate but remember one lesson: you make your money when you BUY. Selling or flipping is done with something you have bought RIGHT.

And condos can be a huge mistake so be extra careful not to BUY them unless you've checked out the association and any maintenance issues that could be required in the common areas.

If you are short selling or trying to get rid of your condo, try to use these factors to your advantage when negotiating with the lender. They REALLY don't want condos back as REOs.

Can you short sale a house and buy ANOTHER short sale?

So let's say you are DOING a short sale on your house, and you want to buy another (silly you).

Can you do this?

There are several ways. First, my understanding is that Fannie and Freddie have relaxed their rules (but I am still trying to verify) so that if you put in 20% down and have done a short sale on your previous property, they will finance the new property. Again, this requires 20% down. And I haven't verified it.

What I would do is this. I would plan on a short sale, and I would buy the other property. That would require me to qualify for both loans of course. So it's problematic. But it would work.

Third option: I would finish the short sale on my first house, and then buy the second. If I do a short sale on the first house, it will show up on my credit as Paid Settled, which isn't terrible. It can be explained. The one condition is that I could NOT have any lates on my house. The house I was selling, that is. It is perfectly reasonable to do a short sale on a house while making all the payments on time. And then you won't have bad credit and you can buy another house.

I've been playing in the short sale sandbox again. There are just too many juicy opportunities not to.

One thing I'm doing is working with a real estate broker who can represent me and we can share in the deals together. This may not be strictly kosher but I am very happy with the results so far. I used to be a licensee but am no longer one and probably am better off not being one.

Also, I continue working with folks who are submitting deals and we partner together. So I am having a blast with it.

When I started teaching students I first warned my students to get rid of problem real estate. I myself was out of all real estate at the peak of the market, in July of 2005. I told everyone who would listen "sell sell sell".

Now that that's ancient history, there are many things you can do to continue profiting from the residential real estate crash, and to improve your situation if you are in trouble yourself.

I have these two videos that will help and I am doing a web training next week with the latest short sale techniques that I've come up with or seen work. And I am releasing my latest revised version of Mortgage Relief Formula and will offer only 250 copies. I expect they will be gone by the end of the week. They are not available now but will be starting on the webinar.

I'll also talk a bit about some neat credit card relief tricks, and loan mod stuff, plus 9 Day House Sale examples, so there will be a lot here for you.

Early movers who are on the webinar will get something special in addition to the unheard of offer.

Meanwhile here are some videos with info that might help you.

Please leave a comment on the blog below and I will give a special gift to one of the folks who comments.